Question 1

Almost one-quarter of the total national debt is held by other U.S.government agencies.

Accepted Answer

A) True 
 B)False

Question 2

The tax rate paid on an additional dollar of income is the:

Accepted Answer

A)  higher tax rate. 
B)  secondary tax rate. 
C)  marginal tax rate. 
D)  reserve tax rate. 
A)  higher tax rate. 
B)  secondary tax rate. 
C)  marginal tax rate. 
D)  reserve tax rate.

Question 3

U.S.marginal tax rates today are lower and flatter than they were in the 1960s.

Accepted Answer

A) True 
 B)False

Question 4

Capital gains taxes are paid:

Accepted Answer

A)  any time an asset rises in value. 
B)  on bonds only. 
C)  only when an asset is actually sold. 
D)  mainly in times of deflation. 
A)  any time an asset rises in value. 
B)  on bonds only. 
C)  only when an asset is actually sold. 
D)  mainly in times of deflation.

Question 5

The alternative minimum tax is indexed to inflation.

Accepted Answer

A) True 
 B)False

Question 6

If you receive a capital gain of $2,000 from selling a stock but also incur a capital loss of $1,500 from selling another stock,the total amount of tax you pay based on a 15% capital gain tax rate is:

Accepted Answer

A)  $0. 
B)  $75. 
C)  $225. 
D)  $300. 
A)  $0. 
B)  $75. 
C)  $225. 
D)  $300.

Question 7

The main cause of higher government spending in the future will be:

Accepted Answer

A)  Medicare,Medicaid,and Social Security. 
B)  national defense and foreign aid. 
C)  unemployment insurance and welfare spending. 
D)  spending on roads,bridges,and infrastructure. 
A)  Medicare,Medicaid,and Social Security. 
B)  national defense and foreign aid. 
C)  unemployment insurance and welfare spending. 
D)  spending on roads,bridges,and infrastructure.

Question 8

Who actually bears the burden of the FICA tax?

Accepted Answer

A)  mostly employees 
B)  mostly employers 
C)  employees and employers in equal amounts 
D)  Congress 
A)  mostly employees 
B)  mostly employers 
C)  employees and employers in equal amounts 
D)  Congress

Question 9

As the baby boom generation retires,Social Security payments will have to increase approximately _____ in order to maintain the level of promised benefits.

Accepted Answer

A)  10% 
B)  25% 
C)  40% 
D)  55% 
A)  10% 
B)  25% 
C)  40% 
D)  55%

Question 10

Suppose you see the following claim made in a local newspaper,"The United States is a welfare economy,where taxes are used to redistribute wealth to the poor." Do you agree or disagree with this sentence? Why or why not?

Accepted Answer

The statement is true for some,but not a

Question 11

What are the arguments for reducing national debt in the United States? What is the difference between the national debt and the budget deficit?

Accepted Answer

The higher the national debt is,the grea

Question 12

Current projections regarding the debt-to-GDP ratio are that:

Accepted Answer

A)  under any plausible scenario,the federal budget is on a sustainable path. 
B)  under any plausible scenario,the federal budget is on a continuous path. 
C)  the federal debt will grow much more slowly than the economy over the long run. 
D)  the federal debt will grow much faster than the economy over the long run. 
A)  under any plausible scenario,the federal budget is on a sustainable path. 
B)  under any plausible scenario,the federal budget is on a continuous path. 
C)  the federal debt will grow much more slowly than the economy over the long run. 
D)  the federal debt will grow much faster than the economy over the long run.

Question 13

If your marginal tax rate is 25% and you can exempt $3,650 of your income for each member of your family (yourself,your spouse,and your one child),then the exemption means you will save _____ in taxes.

Accepted Answer

A)  $912.5 
B)  $1,825 
C)  $2,737.50 
D)  $3,650 
A)  $912.5 
B)  $1,825 
C)  $2,737.50 
D)  $3,650

Question 14

A nation has $6 billion in revenue in year 1 and $7 billion in spending.In year 2,it has $8 billion in revenue and $10 billion in spending.In year 2,what is the national debt and what is the deficit,assuming the nation can borrow at 0% interest without paying on the principle?

Accepted Answer

The national debt in year 2 is $3 billio

Question 15

At income levels above the limit for the lowest tax bracket,the average tax rate is:

Accepted Answer

A)  greater than the marginal tax rate. 
B)  less than the marginal tax rate. 
C)  equal to the marginal tax rate. 
D)  below the marginal tax rate at first but above the marginal tax rate as income rises. 
A)  greater than the marginal tax rate. 
B)  less than the marginal tax rate. 
C)  equal to the marginal tax rate. 
D)  below the marginal tax rate at first but above the marginal tax rate as income rises.

Question 16

What demographic change in the United States will cause government spending to increase in the next 50 years?

Accepted Answer

A)  The population older than 65 will grow. 
B)  The population will be younger. 
C)  Women will have fewer children. 
D)  Immigration will increase. 
A)  The population older than 65 will grow. 
B)  The population will be younger. 
C)  Women will have fewer children. 
D)  Immigration will increase.

Question 17

The most important tax for determining an individual's incentive to work is:

Accepted Answer

A)  the last tax rate. 
B)  the marginal tax rate. 
C)  the total tax rate. 
D)  the average tax rate. 
A)  the last tax rate. 
B)  the marginal tax rate. 
C)  the total tax rate. 
D)  the average tax rate.

Question 18

Suppose the tax rate on the first $20,000 of income is 0%;10% on the next $20,000 earned;and 20% on any additional income earned.A person earning $35,000 pays an income tax of:

Accepted Answer

A)  $1,000. 
B)  $1,500. 
C)  $2,000. 
D)  $3,500. 
A)  $1,000. 
B)  $1,500. 
C)  $2,000. 
D)  $3,500.

Question 19

Corporations ultimately bear the entire burden of the corporate income tax.

Accepted Answer

A) True 
 B)False

Question 20

The second-largest source of revenue for the U.S.federal government is:

Accepted Answer

A)  the corporate income tax. 
B)  the individual income tax. 
C)  excise taxes,such as taxes on gasoline and alcohol. 
D)  Social Security and Medicare taxes. 
A)  the corporate income tax. 
B)  the individual income tax. 
C)  excise taxes,such as taxes on gasoline and alcohol. 
D)  Social Security and Medicare taxes.

Exam 17: The Federal Budget- Taxes and Spending

Almost one-quarter of the total national debt is held by other U.S.government agencies.

The tax rate paid on an additional dollar of income is the:

U.S.marginal tax rates today are lower and flatter than they were in the 1960s.

Capital gains taxes are paid:

The alternative minimum tax is indexed to inflation.

If you receive a capital gain of $2,000 from selling a stock but also incur a capital loss of $1,500 from selling another stock,the total amount of tax you pay based on a 15% capital gain tax rate is:

The main cause of higher government spending in the future will be:

Who actually bears the burden of the FICA tax?

As the baby boom generation retires,Social Security payments will have to increase approximately _____ in order to maintain the level of promised benefits.

Suppose you see the following claim made in a local newspaper,"The United States is a welfare economy,where taxes are used to redistribute wealth to the poor." Do you agree or disagree with this sentence? Why or why not?

What are the arguments for reducing national debt in the United States? What is the difference between the national debt and the budget deficit?

Current projections regarding the debt-to-GDP ratio are that:

If your marginal tax rate is 25% and you can exempt $3,650 of your income for each member of your family (yourself,your spouse,and your one child),then the exemption means you will save _____ in taxes.

A nation has $6 billion in revenue in year 1 and $7 billion in spending.In year 2,it has $8 billion in revenue and $10 billion in spending.In year 2,what is the national debt and what is the deficit,assuming the nation can borrow at 0% interest without paying on the principle?

At income levels above the limit for the lowest tax bracket,the average tax rate is:

What demographic change in the United States will cause government spending to increase in the next 50 years?

The most important tax for determining an individual's incentive to work is:

Suppose the tax rate on the first $20,000 of income is 0%;10% on the next $20,000 earned;and 20% on any additional income earned.A person earning $35,000 pays an income tax of:

Corporations ultimately bear the entire burden of the corporate income tax.

The second-largest source of revenue for the U.S.federal government is:

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